Analyst Vanessa Jeffriess from Jefferies maintained a Buy rating on Elementis (ELM – Research Report) and keeping the price target at p200.00.
Vanessa Jeffriess has given her Buy rating due to a combination of factors that highlight Elementis’s strong financial performance and strategic position. The company’s recent results surpassed expectations, with EBITA approximately 4% above consensus and a significant reduction in leverage to 1.0x. Additionally, the return on capital employed (ROCE) improved to 19% from 15%, indicating efficient use of capital.
Elementis’s coatings segment showed remarkable improvement, with margins increasing by 500 basis points year-over-year to 20.3%, while the Personal Care segment maintained its positive momentum with a 420 basis point margin increase to 28.3%. Despite a lack of detailed outlook commentary, the company has had a solid start to FY25 and is on track to meet its FY26 targets. The overall equity story is compelling, driven by attractive margin improvements and a strengthened balance sheet, even without a demand recovery. However, there are some uncertainties, such as the ongoing strategic review of the Talc business and the absence of updates regarding a new CEO or share buyback plans.
Based on the recent corporate insider activity of 11 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ELM in relation to earlier this year.